HudBay Minerals Inc. has done what many mining companies would like to do: raise a big pile of cash without diluting its already-suffering shareholders.

The Toronto-based miner announced two deals (one definitive) on Wednesday that amount to US$1.35-billion of fresh capital. And with a financing plan in place, the company finally greenlighted its US$1.5-billion Constancia copper project in Peru.

As many analysts speculated, much of the capital is coming from a precious metals streaming deal. HudBay will receive US$750-million from Silver Wheaton Corp. (including US$500-million up front) in exchange for future silver and gold cash flows from both its Constancia and 777 operations.

“It puts capital in the door without stock being issued. And it doesn’t result in us taking on an onerous amount of debt, which you don’t want to do in a cyclical business,” chief executive David Garofalo said in an interview. He added that only 7% of Constancia’s revenue base is precious metals, so it “isn’t a very big give” for the project.

This is the largest cash deal that Silver Wheaton has ever done, and the first major one it has signed since 2009. Yet CEO Randy Smallwood is confident there are more transactions to come soon. Now that silver prices have cooled off and companies are having a tougher time accessing capital, they are not demanding such a high price from Silver Wheaton for their byproduct silver.

“We’re as busy as we’ve ever been. With the weak equity markets and restricted debt markets, there are lots of opportunities for us to provide support,” Mr. Smallwood said.

In addition to the Silver Wheaton transaction, HudBay said it is arranging a US$600-million credit facility with a syndicate of Canadian and international banks.

“We believe that closing the funding gap is a positive catalyst for the share price. However, we also believe that the financing plan has been well-communicated to the investment community by management, resulting in the recent run-up in HudBay’s share price,” TD Securities analyst Greg Barnes wrote in a note.

Despite the difficulties that miners are facing as they try to raise money in this bear market, Mr. Garofalo maintained that the process for HudBay was smooth, because Constancia is a robust project. The internal rate of return on Constancia is estimated at 14.5%, assuming an average copper price of US$2.75 a pound (below the current price of US$3.40). Copper production is expected to average about 90,000 tonnes a year.

One challenge for HudBay will be to prevent costs from spiralling out of control at Constancia as they have at other large projects. Mr. Garofalo noted that the construction period is compressed (with first production due 2014) and about US$250-million of fixed-price contracts have been locked in. That provides a cushion against inflation.

HudBay got the Constancia project when it acquired Norsemont Mining Inc. last year. Some projects in Peru have been stalled by anti-mining unrest (notably those of Newmont Mining Corp. and Bear Creek Mining Corp.), but HudBay has not faced any major community issues at Constancia.

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